{"id":712,"date":"2021-05-29T11:57:00","date_gmt":"2021-05-29T03:57:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=712"},"modified":"2024-07-12T19:18:15","modified_gmt":"2024-07-12T11:18:15","slug":"sovereign-wealth-fund","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/29\/sovereign-wealth-fund\/","title":{"rendered":"Sovereign Wealth Fund(SWF)"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/29\/sovereign-wealth-fund\/#What_is_Sovereign_Wealth_Fund\" >What is Sovereign Wealth Fund?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/29\/sovereign-wealth-fund\/#Sovereign_Wealth_Fund_has_strategy_and_goal\" >Sovereign Wealth Fund has strategy and goal<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/29\/sovereign-wealth-fund\/#The_evolution_of_the_SWF_portfolio\" >The evolution of the SWF portfolio<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/29\/sovereign-wealth-fund\/#World_top_10_SWF\" >World top 10 SWF<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/29\/sovereign-wealth-fund\/#Peoples_concern_on_SWF_management\" >People&#8217;s concern on SWF management<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/29\/sovereign-wealth-fund\/#Difficulty_of_governance\" >Difficulty of governance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/29\/sovereign-wealth-fund\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"has-medium-font-size wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Sovereign_Wealth_Fund\"><\/span><strong>What is Sovereign Wealth Fund?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Sovereign funds refer to financial assets or funds established and owned by sovereign governments for long-term investment; generally speaking, they are managed by specialized government investment institutions. The oil-producing countries in the Middle East had this idea very early; for example, the Kuwait KIA established in 1953, the United Arab Emirates ADIA established in 1976, and the US Alaska APRF established in 1976. Later, even non-oil-producing countries rushed to establish it, and the name might not be called a national sovereign fund. <\/p>\n\n\n\n<p>The purpose of the establishment of the  national sovereign fund is still to earn additional investment income for the country. Generally speaking, the source of funds for national sovereign funds is the surplus of natural resources and bulk material exports, such as oil, natural gas, copper, and diamonds. The second source is capital used as investment in foreign exchange deposits and export surplus. Other sources of funds are the issuance of special treasury bonds or international aid funds.<\/p>\n\n\n\n<h2 class=\"has-medium-font-size wp-block-heading\"><span class=\"ez-toc-section\" id=\"Sovereign_Wealth_Fund_has_strategy_and_goal\"><\/span><strong>Sovereign Wealth Fund has strategy and goal<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>National sovereign fund investment strategies and operating methods for different purposes will also have different investment behaviors, operations, and management methods. The purpose of the establishment of sovereign wealth funds usually has the nature of strategy (whether it is a national strategy or an industrial strategy); the biggest difference between it and general mutual funds is the long-term return of the primary asset, and short-term fluctuations are not considered by national sovereign fund. <\/p>\n\n\n\n<p>However, due to the huge differences in the national conditions and needs of various countries, the fund&#8217;s investment portfolio will have different allocations for the types of assets, currencies, countries, industries, and risk tolerances it invests in. In general national sovereign funds, early assets are mostly concentrated in fixed-rate bond instruments issued by G7 countries.<\/p>\n\n\n\n<h2 class=\"has-medium-font-size wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_evolution_of_the_SWF_portfolio\"><\/span><strong>The evolution of the SWF portfolio<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>However, in recent years, it has focused on a global diversified asset portfolio including stocks and other risky assets, and even expanded to other alternative assets (foreign real estate, private equity investment, commodity futures, hedge funds and other non-traditional stock markets and bonds). <\/p>\n\n\n\n<p>At present, the most popular investment target of sovereign fund investment is to use its huge capital to enter the field of venture capital, hoping to find the next unicorn like Amazon, Facebook, or Alibaba. A 2017 study by the Boston Consulting Group showed that in the past five years, digital and technology transactions accounted for nearly 30% of the total transactions funded by sovereign wealth funds, while the proportion of consumer-related product and service transactions has declined significantly. <\/p>\n\n\n\n<p>Today, sovereign funds are one of the major holders of large blue chip stocks in major stock markets around the world. Their every move will have a great influence on the stock market. \u2500 \u2500 The top five Norwegian sovereign funds by the end of 2020, the shareholding and the weighting of the fund are: Apple 4.4%, Microsoft 3.5%, Amazon 2.9%, Alphabet 2.2%, Facebook 1.4%.<\/p>\n\n\n\n<h2 class=\"has-medium-font-size wp-block-heading\"><span class=\"ez-toc-section\" id=\"World_top_10_SWF\"><\/span><strong>World top 10 SWF<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The following are the top ten national sovereign funds in the world (as of 12\/06\/2020); Mainland China has three seats, and only one is a non-Asian country.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/www.nbim.no\/\" target=\"_blank\" rel=\"noreferrer noopener\">Norway Government Pension Fund Global<\/a>, the net value of the fund is 1.122 trillion US dollars.<\/li>\n\n\n\n<li>China&#8217;s China Investment Corporation (CIC) has a fund net worth of US$1.046 trillion.<\/li>\n\n\n\n<li>Abu Dhabi Investment Authority, the fund&#8217;s net worth is US$580 billion.<\/li>\n\n\n\n<li>Kuwait Investment Authority, the fund has a net worth of US$534 billion.<\/li>\n\n\n\n<li>The Hong Kong Monetary Authority Investment Portfolio has a net value of US$528 billion.<\/li>\n\n\n\n<li>Singapore Government Investment Corporation (GIC Private Limited), the fund&#8217;s net value is US$453 billion.<\/li>\n\n\n\n<li>Temasek Holdings, the net value of the fund is 417 billion US dollars.<\/li>\n\n\n\n<li>Saudi Arabia\u2019s Sovereign Wealth Fund-Public Investment Fund (PIF), with a net value of US$347 billion.<\/li>\n\n\n\n<li>The National Council for Social Security Fund has a net value of US$325 billion.<\/li>\n\n\n\n<li>Dubai Investment Corporation, the fund has a net worth of US$305 billion.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"has-medium-font-size wp-block-heading\"><span class=\"ez-toc-section\" id=\"Peoples_concern_on_SWF_management\"><\/span><strong>People&#8217;s concern on SWF management<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In recent years, people have begun to have doubts about the management and corporate governance of sovereign funds in various countries. The management structure and corporate governance of sovereign funds have long been a troublesome issue; Hong Kong is directly managed by the central bank, while Singapore has a special investment institution responsible for management. <\/p>\n\n\n\n<p>In terms of corporate governance, successful sovereign wealth funds, such as the UAE Abu Dhabi Investment Authority, Singapore\u2019s GIC, and the Norwegian Government Pension Fund, have imitated the organizational forms of the corporate world and avoided copying the structure of government administrative agencies. But supervision is a dilemma; because this is the citizen&#8217;s money, supervision is a difficult problem. The decision-making process is usually populist &#8220;politics over professional&#8221;, such as the 1Malaysia Development Berhad (1MDB) scandal in Malaysia.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"164\" height=\"90\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2022\/09\/swf-1600x1200-1.jpg\" alt=\"Sovereign Wealth Fund\" class=\"wp-image-14196\"\/><\/figure>\n\n\n\n<h2 class=\"has-medium-font-size wp-block-heading\"><span class=\"ez-toc-section\" id=\"Difficulty_of_governance\"><\/span><strong>Difficulty of governance<\/strong> <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In addition, the main concern about sovereign funds at present is that the purpose of sovereign funds may not be to make a profit, but to acquire strategic knowledge or technology. Therefore, the 23 &#8220;International Monetary Fund&#8221; member states that have sovereign funds agreed in March 2008 to formulate the &#8220;Washington Agreement&#8221; to regulate the behavior of sovereign funds.<\/p>\n\n\n\n<p>For readers who are interested in knowing about Norwegian sovereign funds, please refer to my in-depth introduction to the column &#8220;Imitate Norwegian Pension Fund and Earn 6% per Year&#8221; written for Smart magazine (in Traditional Chinese).<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/05\/22\/learn-from-gpf\/\" target=\"_blank\" rel=\"noreferrer noopener\">What investors can learn from GPF (Norway Sovereign Wealth Fund )<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/05\/19\/norway-sovereign-wealth-fund\/\" target=\"_blank\" rel=\"noreferrer noopener\">How great Norway Sovereign Wealth Fund (GPF) is<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/29\/sovereign-wealth-fund\/\" data-type=\"URL\" data-id=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/29\/sovereign-wealth-fund\/\" target=\"_blank\" rel=\"noreferrer noopener\">Sovereign Wealth Fund (SWF)<\/a>&#8220;<\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Sovereign Wealth Fund(SWF)<\/p>\n","protected":false},"author":1,"featured_media":14196,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[244],"tags":[254,227,249,158,250,93,253,251,252,255,256,257],"class_list":["post-712","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-sovereign-wealth-fund","tag-adia","tag-amzn","tag-aprf","tag-baba","tag-cic","tag-fb","tag-gic","tag-kia","tag-nssf","tag-pif","tag-swf","tag-temasek"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/712","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=712"}],"version-history":[{"count":23,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/712\/revisions"}],"predecessor-version":[{"id":15144,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/712\/revisions\/15144"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/14196"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=712"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=712"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=712"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}